Fred Wilson had a great post about an issue that I think most entrepreneurs have to deal with: how to process all of the information that is flowing past us about other startups.
Here’s the comment I wrote in response:
Such an important topic.
I’ve found that as a competitive person the hot new startup of the day can trigger the competitive gene. I read something and want to be as successful as that hot new company that did the new deal, raised the big round, etc.. But the reality is that history is not written today. Many of those companies that are hot today will be gone tomorrow so getting my vision of the future from today’s newspaper is a recipe for disaster.
Ultimately, comparing business A against business B is something only investors get to do. For me as an entrepreneur it’s a largely fictitious option since I can’t start a new company for every new idea that comes along even if that idea is, in fact, a better idea/business than the one I’m currently working on. And of course, by the time another business has *actually* been proven to be a better business, it’s often too late for the new entrant starting from scratch. Though, of course, following the hot business model is a concept that is alive and well – hence the 10s, if not 100s, of daily deal email lists that have been started (and funded).
Investors get to work on maximizing global maxima by finding the best company among many. Many try, few succeed. The downside is that all of those potential options (companies to invest in) can drive the investor to be unfocused. They know a little bit about many things but don’t really know very much about any one. Unwittingly, in the search for the best business, they become momentum investors trying to get into the hot deal of the day in sectors that seem “hot” but about which they actually don’t yet have a deep feel. I believe that my job as an entrepreneur is to focus on creating a local maxima within the opportunity I’m working on and leave the global maxima challenge to investors. I make my money by getting a single, double, triple or homerun in what I’m working on – all of those outcomes make me and my investors money. I’d love to hit a homerun but if the business is only capable of hitting a double or single, that’s also still good. And it’s very rare that a business, properly executed, can’t hit at least a double or single.
There is a lot of noise out there in the press and in the blogs and if you emotionally invest in every new trend and meme you’ll get a bad case of whiplash. I’m confident that if you constantly implement the newest feature of the day the result will be a product mishmash and two years down the road you’ll have a bundle of stuff that what was hot but that turned out to be only novel, not important. This will have come at the cost of being focused on the the core big ideas that really catapult your own business. You have to keep your own counsel, for better and worse, if you plan to create the future.
It’s my job as an entrepreneur to not only see the future but also create it and I can’t do that if I’m also worrying about the five other futures I could be seeing and creating.
History is not written in todays newspaper.